Channel 4 voices doubts over 38m pounds for ITV firms

CHANNEL 4 yesterday questioned whether its interests were being properly served by a safety net funding formula created by the Government, which means it has to make a first annual payment totalling pounds 38.2m to the 16 ITV companies.

Sir Michael Bishop, chairman of Channel 4, said that the amount paid over significantly exceeded the value of cross promotion of its programmes on ITV, and that if the channel had retained the money it would have been used to make more UK films and television programmes.

The dissatisfaction comes amid mounting evidence that the Broadcasting Act of 1990 is proving deeply flawed, while the Government has already started to move the goalposts by allowing ITV companies to merge into stronger units.

Channel 4, releasing its annual results yesterday, confirmed that it had attracted record audiences and revenue during 1993, the first year of new terms and conditions under the 1990 Act. The principal change is that it is selling its own advertising airtime for the first time, in competition with ITV, which used to do the job for it.

The minority channel, run by Michael Grade has been highly successful, attracting revenue of pounds 330.1m compared with pounds 243m in 1992. Its audience share also rose to 10.98 per cent, from 10.13 per cent - it was the only terrestrial broadcaster with a rising share.

It is raising its programme budget to pounds 205m in 1994 from pounds 184m, at a time when ITV is cutting its budgets by pounds 13m to pounds 530m. It is also planning to revamp its afternoon schedules with new programmes, between 2pm and 4.30pm to attract more viewers.

Under the Broadcasting Act formula, meant to last 10 years, Channel 4 has to give half of its income (from advertising and sponsorship) in excess of 14 per cent of total net terrestrial television revenue. Channel 4 obtained an 18.2 per cent share during 1993.

This means that Carlton, the largest ITV contractor, gains pounds 5.648m, with Central, which it is buying, gaining pounds 5.659m. Granada gains pounds 4.08m while LWT, which it is bidding to take over, collects pounds 4.177m.